Philips to outsource VCR production

Amsterdam, the Netherlands - As new technologies in video recording and playback are rapidly emerging, Philips' Consumer Electronics Mainstream division is to refocus its VCR activities. Following expansion in promising digital consumer electronics product areas such as digital video and optical disc technologies (DVD), the mass manufacturing of VCRs for the European market will be outsourced to Funai Electric Company, of Japan, the world's largest manufacturer of VCRs. Philips will scale down its own development activities for video tape recorder technology and will concentrate its resources on marketing and sales.

The market for analog video recorders has transformed into a mature market with changing business characteristics. This has led to a consolidation process with the center of gravity in Asia. Guy Demuynck, CEO of Philips Consumer Electronics Mainstream, says: "The growth in the global consumer electronics market is slowing down. Philips is holding a strong top three market position for video recorders and TV/Video combis worldwide, with a clear number one position in Europe. To safeguard this leading position we decided to expand our cooperation with Funai."

Currently, video recorders are manufactured by Philips in Austria (Vienna) and Hungary (Szekesfehervar). The industrial activities for TV/Video combis and the growing industrial activities for DVD will remain in Szekesfehervar.

Between now and mid next year, these measures will lead to a headcount reduction of approximately 1,000 of which 850 are related to the VCR activities in Vienna. The latter is part of an overall industrial restructuring program in Vienna leading to a loss of 1,200 jobs. The related restructuring charge is included in the figures for the second half of this year as mentioned by Philips at the Press Conference on the semi-annual figures on July 17, 2001.

Any questions? Please contact

Beate McGinn


Philips Austria
Tel +43 1 60101 1431


Cor Vreven


Philips Consumer Electronics, Corporate Communications
Tel +31 40 27 34224
Fax +31 40 27 32729
E-mail cor.vreven@philips.com


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A Royal Philips Electronics da Holanda (NYSE: PHG, AEX: PHI) é líder global em saúde, iluminação e produtos de consumo e estilo de vida, oferecendo inovações, serviços e soluções por meio da sua promessa de marca "Sense and Simplicity". Com sede na Holanda, a Philips possui aproximadamente 123.800 funcionários em mais de 60 países. Com um volume de vendas de 27 bilhões de euros em 2007, a empresa é líder de mercado em equipamento para diagnóstico médico por imagem e monitoramento de pacientes, soluções em iluminação com base na eficiência enérgica, produtos de cuidados pessoais e para a casa, bem como eletrônicos de consumo. Mais informações sobre a Philips podem ser encontradas no site www.philips.com/newscenter.


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This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, levels of consumer and business spending in major economies, changes in consumer tastes and preferences, the levels of marketing and promotional expenditures by Philips and its competitors, raw materials and employee costs, changes in future exchange and interest rates (in particular, changes in the euro and the US dollar can materially effect results), tax rates and future business combinations, acquisitions or dispositions and the rate of technical changes. Market share estimates contained in this report are based on outside sources such as specialized research institutes, industry and dealer panels, etc. in combination with management estimates.